Home Finances - How to Budget Your Hard-Earned Dollars

The financial crisis of the past two years has hit many households where it hurts most - the wallet. Money has become tight and for an unfortunate many jobs have disappeared. Making ends meet these days has become a challenge. If your home finances are in disarray; and the ability to plan your future well-being is on the back burner, you'll find yourself building more stress in your life than is necessary.The best way to face your financial challenges is to meet them head-on - with a budget. The days of operating a household without knowing where you spend your hard earned cash are gone. So, let's sit down and make plans that will help you organize, prioritize, and meet important financial goals.Knowing where you spend your money is important. Let's gather a few things together and see exactly where your money goes.In order to meet this goal you will need to keep a receipt for every purchase you make. Receipts for groceries, home repairs, doctor visits, incidental spending, and everything else, will need to be kept and listed.All your fixed bills will also need to be recorded. These include the phone bill, water bills, electric bills, medical insurance bills, rent, mortgages, etc.If you have a checking account and use a debit card in conjunction with your checks you can print your last three months of statements and get to work immediately without the hassle of building a list from scratch.Planning is an essential part of developing a simple budget. You can use a paper spreadsheet or one on your computer if you have one. Assuming you are using a computer, you'll be making several columns.List your income for the month. Start the first column on the left hand side. Don't forget to include child support, and other sources of income. Make a category for each income item, i.e., Bill's pay, Sally's pay, and child support. In column two list your actual income for each category.Expenses are next. In the same row under your income column list your expense categories, making one for each fixed expense; i.e. a line for electric, phone, water, and so on. The next column will contain the amount spent for each of your fixed items. Example: in this column you'll place $52 next to electric, as that is the average amount you spent on electric over the past three months. Complete this line item for each fixed category.Next take a look at your other expenses tallying the amount you spent for each category over the last three months. Example: You ate out, ordered pizzas one night a month, and bought lunch four times a month instead of carrying your lunch. Your monthly average totals forty one dollars. Place $41 dollars in your dining-out column for a budgeted amount.Example two: You had to purchase a new faucet for the kitchen and make minor repairs around the house. In three months you spent $83, for an average of $28 a month. Place that figure in column two next to home repairs.Try not to make a miscellaneous column, as this catch-all column has the tendency to grow out of control. Instead, take the time to list the expenses in a category, no matter how small the items listed are. Clothing, pet food, vet costs, and other discretionary spending should each have their own category.Don't forget to plan for upcoming birthdays, a gift category. If you pay your property taxes separate from your mortgage make a category for it in the fixed expense section. Likewise make a category for car insurance in your fixed expenses whether you pay yearly, quarterly, or monthly. Other category items to remember may include school supplies and entertainment items such as movie rentals, book purchases, and even the newspaper.The goal is to capture all you expenses, a must if you are serious about planning to meet your expenses with a limited budget. When your spending money is listed is it simplified and you can more easily keep track of where your money goes.If your home finances are being stretched thin, it is more important than ever to set a budget and stick to it. Realize this may be much easier said than done. Especially since your next step will be to prioritize your spending.

Budget Your Home Finances Properly

Budgeting should be the first step a financial adviser takes when advising a client, however if you are not willing to pay for a professional adviser, you should still take the time to understand your situation and budget your home finances yourself.Budgeting is the process of looking at all your incomes and expenditures, and finding the difference between the two. This is so important as this can show you how much money you have available to save each month, or if you do not have enough money coming in to meet your needs.A simple spread sheet program is the easiest way to do this, but pen and paper with a calculator will do just fine but may take a little longer. This can seem a daunting task if you have never done it before but can actually be quite rewarding, especially if you find ways of cutting expenditures and start to see the amount of disposable income you have.On one side you need to list all your income. This can be salaries, any benefits or tax credits, as well as any other regular income you receive such as interest on savings. If you have regular overtime or bonuses these should be included but be careful if these are not guaranteed. You may want to make a sub heading for income that you can't rely on.Depending on your circumstances you may want to do these figures both net or gross. If your main income is salary then it will be easier to just work with your net income. However, if you have many different sources or are self-employed, it will probably be easier to use gross figures and then calculate the tax and other deductions at the top of the expenditure column.Expenditures are likely to be a longer list than incomes. Most large bills can be identified easily from your bank statements, but to get a complete view it is best to keep records for a month to account for everything you pay. Even small expenses can add up, so include as much as you can.To prioritize your expenditures it is normal to break them up into three groups. Essential expenditures are the priority bills, and this is important if you are struggling with meeting your payments. Essential expenditures are obviously items like your housing costs and utility bills. The next level is everyday spending, items which you really need like food and travel. The final section is discretionary spending which covers everything else like vacations, clothing, entertainment and dining out.The final task is to total both columns and determine the difference between the two. In doing this process, you will see obvious expenditures that your can cut out or reduce to improve your bottom line. Ultimately if you want your savings to be higher, you will have to either earn more or spend less, but at least you will now know where to start. Hopefully reading this article will help you in some way to budget your home finances.